Importers can’t cork rising wine prices with France tariffs
Retailers, connoisseurs brace for pop in what they pay after WTO backs taxes on EU goods
When Jean-Philippe Guy ordered 622 cases of wine from France last month, the Houston wine importer expected to pay about $4,000 in import taxes.
But while his wine was being loaded onto a container ship at a port near Marseille earlier this month, the Trump administration announced a 25 percent tariff on French wines that take effect Friday. Guy, the owner of French Country Wines, now faces a $20,000 tax when his wine arrives at the Port of Houston on Oct. 23.
“It’s a lot of money I wasn’t planning on spending,” Guy said. “I’m trying to keep a positive attitude, but I’m really mad about how this whole thing is panning out.”
American importers, retailers and connoisseurs of European wine are bracing for a big pop in prices after the World Trade Organization earlier this month approved U.S. tariffs on up to $7.5 billion of European products annually.
After the tariffs go into effect, Guy estimates a $20 bottle of wine at French Country Wines could cost as much as $24. About 80 percent of the company’s sales are wine bottles priced in the $20 range. Those buyers tend to be more price-sensitive, and the profit margins on these lessexpensive bottles are much smaller.
The WTO decision capped a 15year trade dispute over European Union subsidies to French planemaker Airbus, which the U.S. government argues put American manufacturers, such as Boeing, at a competitive disadvantage. To pressure the EU to drop its Airbus subsidies, the Trump administration said it would impose a 25 per
cent tariff on a wide range of European products, including Italian Amaretto, Scotch whisky and French wine containing less than 14 percent alcohol. The U.S. will also levy a 10 percent tariff on new airplanes from France, Germany, Spain and Britain.
The EU plans to respond with retaliatory tariffs, although it hasn’t announced its targets. The U.S. and France traded $129 billion of goods and services in 2018, up 7 percent from the previous year. There was $7.1 billion in goods traded between Texas and France last year.
‘Stuck paying the bill’
Wine importers, in particular, are caught in the middle of this dogfight over airplane subsidies.
France is the second largest producer of wine, behind Italy. Although French wine-makers may lose some business due to the tariffs, American demand for French wines is unlikely to wane.
The U.S. is the largest consumer of French wines and spirits, importing $3.5 billion worth of bottles in 2018, up 4.6 percent from the previous year, according to the Federation of French Wines and Spirit Exporters.
“People love French wines,” Guy said. “I don’t see French wines going down.”
Guy said he will try to absorb as much of the tariffs as he can so he doesn’t lose customers. But he wonders why food and beverage importers have to shoulder the burden of a trade dispute related to commercial airplanes.
“Boeing and Airbus are the big guys, but it’s the little guys like us who are stuck paying the bill,” Guy said, standing in the middle of his shop surrounded by wine bottles. “Why does the American consumer have to pay for it?”
French Country Wines was founded in 2006 by Phyllis and Tim Smith, who wanted to offer Houstonians affordable wines from small, family-owned vineyards across France. After the Smiths retired last year, Guy took over the import business and retail shop near Upper Kirby.
Guy — a French American whose family hails from Clermont-Ferrand, home of the Michelin tire factory — travels to France twice a year to source his Old World wine. There’s rosé from the Les Vignobles Gueissard winery in Bandol and Sauvignon Blanc from the Domaine Franck Millet winery in Sancerre, both regions renowned for their “terroir,” or the highquality soil, climate and environment in which their grapes are grown.
Through his BBR Imports business — short for Bleu Blanc Rouge, the colors of the French flag — Guy transports thousands of cases of French wine to Houston each year in refrigerated shipping containers chilled to 56 degrees. Once they arrive, Guy sells his French wine to local enthusiasts and restaurants, including Bistro Menil, Tiny Boxwoods and Bistro Provence, which is owned by Guy’s wife, Genevieve Guy.
Business is booming for French Country Wines, which has imported 3,800 cases so far this year, up 25 percent from last year’s total of 3,100 cases. A case holds 12 wine bottles. Nearly a third of the company’s imports are French rosé, which has grown more popular in recent years.
Guy estimates he could import and sell another 500 to 600 cases by the end of the year, but the looming tariffs have given him some pause.
“I’m not sure what we’re going to be doing right now,” Guy said. “All I know, it’ll cost us money.”
Persistent loyalty
Greg Martin, the chef of Bistro Menil, serves a wine list with offerings from France, Italy, Spain, New Zealand and Napa Valley, Calif. The French wines are by far the most popular, representing a third of wine sales at his European-inspired restaurant. Prices range from $10 to $18 per glass.
Martin said he will be forced to pass the cost of the tariffs onto consumers and to raise wine prices. While patrons of Bistro Menil and French-wine drinkers in general tend to be well heeled, Martin said, consumers will inevitably question why their favorite beverage is suddenly more expensive.
“It’s kind of a bummer,” he said. “I think consumers are eventually going to feel fatigue across the market.”
Rhett Shumpert buys bottles from French Country Wines twice a month and often attends its Saturday wine-tasting sessions. The retired IT professional said he planned to reassess his wine budget amid the tariffs, perhaps eschewing $40 bottles of wine in favor of $25 bottles. However, he said it’s unlikely he’ll stop drinking his favorite French wines.
“I like the Old Worldness that the French country wines have that you just can’t get out of California,” the Katy resident said. “I like what I like.”
Ultimately, Shumpert and Guy lamented the deterioration of trade talks between the U.S. and France, which has been an American ally since the Revolutionary War.
“It’s a slippery slope when we start to tax allies who have been close to us the longest,” Shumpert said. “It runs the risk of alienating us.”
“Even a big country like the U.S. needs friends,” Guy said. “We should be able to talk to our friends without picking fights.”
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